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House price growth to reach 14% in November

Reallymoving has predicted annual house price growth to reach 14% by November 2020.

The quote service said the prediction is based on deals already agreed, as pent up demand and urgency to benefit from the temporary stamp duty holiday has driven up activity in the market.

Annual price growth is forecast to reach 4.7% in September, 11.4% in October, and finally 14% in November.

Rob Houghton, chief executive of reallymoving, said: “Buyers are determined to make their move now, despite the fact that the current spike in prices will in many cases wipe out the stamp duty savings.

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“For those higher up the ladder with secure finances, a healthy level of equity in their property and little other debt, gloomy economic forecasts are only encouraging them to press ahead with the move rather than sit tight and wait out what could be a long and painful recession.

“More than ever people’s homes are their castles and their offices – and with borrowing costs likely to be rock bottom for the foreseeable future, paying over the odds on a purchase isn’t too painful if you’re also getting over the odds on your sale and making a stamp duty saving.

“It’s a different story for first-time buyers though, who aren’t benefitting from stamp duty savings in most areas and who have seen low deposit mortgages all but wiped out. This explains why the proportion of first-time buyers in the market has dropped by 19% since May.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House prices rise as appeal of gardens and space grows

Housing market activity in the region continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home.

Sixty-three per cent of respondents reported an increase in buyer interest across the West Midlands over the month, according to the August 2020 RICS UK Residential Survey.

However, the longer-term view remains more cautious.

As buyer enquiries continued to rise, the number of new properties listed for sale also increased, with a net balance of plus 26 per cent of survey participants noting an increase in vendors listing property to sell.

Consequently, strong growth in agreed sales was cited for a third successive month, with a net balance of plus 52 per cent of contributors seeing a pick-up.

Looking ahead, near term sales expectations for the West Midlands remain positive, but 12-month sales projections are still in negative territory, with the net balance coming in at minus 12 per cent.

Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

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Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as eight per cent of respondents, nationally, anticipate demand increasing for homes with gardens over the next two years.

Seventy-nine per cent predict rising demand for those properties near green space, while a net balance of plus 68 per cent foresee a rise in the desirability of properties with more private/less communal outside space.

Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation.

Across the region, a net balance of plus 52 per cent of respondents reported an increase in prices, the strongest reading since September 2018.

This is up from a net balance of plus 49 per cent in July and marks a turnaround compared to the reading of minus 27 per cent registered back in May.

Simon Rubinsohn, RICS chief economist, said: “The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months.”

By James Pugh

Source: Shropshire Star

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Region’s house price growth at highest level in almost two years

Housing market activity in the West Midlands continued to rise in August, as those looking to take advantage of the stamp duty holiday continued their search for a new home.

A net balance of 63% of respondents reported an increase in buyer interest across the region over the month, according to the August 2020 RICS UK Residential Survey.

However, the longer-term view remains more cautious.

As buyer enquiries continued to rise, the number of new properties listed for sale also increased, with a net balance of +26% of survey participants noting an increase in vendors listing property to sell.

Strong growth in agreed sales was cited for a third successive month, with a net balance of +52% of contributors seeing a pick-up.

Looking ahead, near term sales expectations for the West Midlands remain positive, but 12 month sales projections are still in negative territory, with the net balance coming in at -12% (up from -40% last time). Anecdotal evidence suggests concerns over the broader economic climate continue to drive this subdued assessment.

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Meanwhile, the pandemic is expected to cause a lasting shift in the desirability of certain property characteristics, as 83% of respondents, nationally, anticipate demand increasing for homes with gardens over the next two years. 79% predict rising demand for those properties near green space, while a net balance of +68% foresee a rise in the desirability of properties with more private / less communal outside space.

Turning to house prices, the August survey feedback points to a sharp acceleration in house price inflation. Across the region, a net balance of +52% of respondents reported an increase in prices, the strongest reading since September 2018. This is up from a net balance of +49% in July and marks a turnaround compared to the reading of -27% registered back in May.

In the lettings market, tenant demand continued to rise sharply in the West Midlands, while landlord instructions returned to negative territory following a rebound in July. Rental growth expectations over the near term have now strengthened in each of the past three months, with a net balance of +58% of contributors now anticipating an increase.

Simon Rubinsohn, RICS chief economist, said: ‘The latest RICS survey provides firm evidence of a strong uplift in activity in the housing market which should help support the wider economy gain traction over the coming months. More of a concern is the pick-up in prices which could intensify issues around affordability in some parts of the country. Disaggregated data shows demand generally to run ahead of supply.

“Meanwhile the results provide a further pointer to more substantive changes taking place in household behaviour in the wake of the pandemic. Increased demand for properties with garden and near green spaces has if anything increased since we tested the water in May.’

By Rachel Covill

Source: The Business Desk

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UK house prices hit record high as stamp duty cut powers market

UK house prices hit a record high in August after pent-up demand and the stamp duty holiday combined to power the market upwards, according to lender Halifax.

However, Halifax cautioned that prices were “unlikely” to continue on their current path, with rising unemployment set to catch up with the market.

Prices rose 1.6 per cent month on month despite the UK being hit by the worst recession in modern history. That meant prices were 5.2 per cent higher in August than they were a year earlier, Halifax said.

The surprising surge in prices has now been confirmed by numerous sources. Last week, building society Nationwide said UK house prices jumped two per cent in August to hit an all-time high.

“A surge in market activity has driven up house prices through the post-lockdown summer period,” said Halifax managing director Russell Galley.

He said the rise has been “fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty”.

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Tax cut has desired effect on UK house prices

The rise will please the government, which had sought to boost the property market. It increased the threshold at which buyers pay the stamp duty tax to £500,000 from £125,000 until the end of March.

Britain’s housing market was frozen in April and May. After it reopened in June, many who had scrapped plans to move put them in motion again. The market has also been helped by a rise in savings during lockdown.

The jump in prices now means the average UK house costs £245,747, according to Halifax. That is good news for property owners, but will hurt first-time buyers.

Lucy Pendleton from estate agents James Pendleton, said the figures confirm “the red hot finish to the summer suggested by the Nationwide last week”. She added: “The typically more bullish Halifax index hasn’t disappointed.”

However, Galley warned that the price surge is unlikely to be sustained in the medium.

Prices could fall three per cent by next year

“The macroeconomic picture in the UK should become clearer over the next few months as various government support measures come to an end,” he said.

Economic forecaster the EY Item Club predicted UK house prices could fall by three per cent by early 2021.

Howard Archer, chief economic adviser to the Item Club, said: “Housing market activity may well see a further pick-up in the near term providing some support to prices.”

But he added: “The current marked pick-up in activity and firming of prices will prove unsustainable before long.” He said the “upside for the housing market” will be “limited by challenging fundamentals for consumers”.

Andrew Burrell of Capital Economics said: “Pent-up demand will soon be expended.”

He added: “A weak economy, cautious lenders and the end of the stamp duty cut will weigh on prices.”

By Harry Robertson

Source: City AM

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House prices recover to ‘all-time high’

UK house prices have seen the highest monthly rises in 16 years, reversing losses recorded in previous months, according to the latest Nationwide House Price Index.

The index, published today (September 2), showed UK house prices rose by 2 per cent in August, after taking account of seasonal factors, marking the highest monthly rise since February 2004 when it was 2.7 per cent.

Annual house price growth consequently “accelerated” to 3.7 per cent in August, from 1.5 per cent the previous month, the lender added.

Average house prices reached an all-time high of £224,123, up from £220,935 in July.

Robert Gardner, chief economist at Nationwide, said: “House prices have now reversed the losses recorded in May and June and are at a new all-time high.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”

He added: “This rebound reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing. Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.”

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Nationwide’s House Price Index for May and June showed prices fell 1.7 per cent and 1.4 per cent respectively month-on-month, after taking account of seasonal factors.

Commenting on the latest figures, Chris Sykes, mortgage consultant at Private Finance, said: “This latest data shows that strong activity levels in the housing market are continuing to put upward pressure on property prices.

“Price rises in August may be in part the result of residual pent up demand still being released following the reopening of the housing market and the higher stamp duty threshold incentivising buyers and buy-to-let investors to push ahead with purchases.

“This has created a unique set of circumstances making it appear as if it is business as usual.”

While Mr Gardner said the trends looked “set to continue in the near term”, boosted further by the stamp duty holiday, he warned: “[Most] forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down.

“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”

Likewise, Private Finance’s, Mr Sykes said: “[This] buoyancy may not last for long. Severe uncertainty over the strength of the UK’s economic recovery is persisting, while concerns about the reintroduction of a nationwide lockdown are mounting due to an uptick in infections. This could cause the market to readjust to reflect the new economic reality.”

He added: “Lenders are beginning to hedge against high uncertainty levels in the UK economy by reducing their exposure to riskier borrowers”.

By Chloe Cheung

Source: FT Adviser

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UK house prices to ‘hold firm’ in 2020 despite Covid-19 crisis

UK house prices are set to hold firm for the rest of the year despite the looming recession and rising unemployment sparked by the coronavirus crisis.

Annual house price growth has been sustained at 2.5 per cent as demand continues to outstrip supply, despite fears that the pandemic would cause property values to plunge.

According to the latest research the UK housing market is performing at its strongest for five years, with the volume of sales agreed per agent up 76 per cent on the five year average.

The most recent UK house price index from property platform Zoopla found that house prices will end the year two to three per cent higher than the start.

Annual house price growth in London was 2.1 per cent in July, compared to the same time last year where the capital was registering house price falls of 0.9 per cent.

Zoopla research and insight director Richard Donnell said: “Housing market conditions remain unseasonably strong despite the UK moving into recession.

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“Demand continues to outpace supply and support house price growth of 2.5% per annum.

“Meanwhile, houses are selling faster than flats as we see a shift in buyer priorities in the wake of the lockdown and movers prioritise more space.

“The next important milestone for the housing market comes in September when schools reopen and the UK starts to get back towards a full reopening of the economy.

“ The ‘once in a lifetime’ re-evaluation of housing requirements on the back of the lockdown will be a counterweight to the impact of the recession on housing market activity over the rest of 2020.

“While demand has softened over August, we expect the current momentum in market activity to continue into the fourth quarter.”

By Jessica Clark

Source: City AM

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House prices recover in July

Annual house price growth has recovered to 1.5 per cent in July, according to the latest Nationwide House Price Index.

The figures, published today (July 31), also found that prices rose month-on-month by 1.7 per cent, in contrast to the fall of 1.6 per cent in June.

Robert Gardner, chief economist at Nationwide, said: “The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.”

Mr Gardner added that the increased stamp duty threshold would “bring some activity forward” but also warned of a “false dawn”.

He said: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead”.

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 Jul-20Jun-20
Monthly Index (seasonally adjusted)435.9428.8
Monthly Change (seasonally adjusted)1.7%-1.6%
Annual Change1.5%-0.1%
Average Price£220,936£216,403

Islay Robinson, group CEO of Enness Global Mortgages, said: “Buyer demand has been turbocharged via a stamp duty holiday, mortgage rates remain very favourable, and buyers and sellers are returning to the market in their droves.

“We’re also seeing a strong return to form at the top-end of the market and from foreign buyers. All things considered, the outlook is a positive one, and we’ve seen the dark clouds of market decline make away for the perfect storm of property price growth over the coming months.” 

Jeremy Leaf, principal at estate agency Jeremy Leaf & Co, said the data was “not surprising” as pent-up demand continued to be released and new listings picked up since the housing market re-opened. 

“Activity has been given added impetus by the stamp duty holiday and continued low interest rates.”

However Shaun Church, director at Private Finance, said: “Although economic activity is slowly recovering, lenders remain cautious. Cuts to rates on lower loan-to-value products suggest lenders are keen to reduce their risk appetite to offset high uncertainty in the housing market.

“This is likely to create a barrier to entry for first-time buyers, adding to the heavy financial burden the pandemic has placed on many people in this age group.”

By Chloe Cheung

Source: FT Adviser

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UK house prices surge the most in 11 years as lockdown lifts

UK house prices jumped the highest in 11 years this month, adding to signs that parts of the economy are rebounding rapidly as coronavirus restrictions are eased.

Mortgage lender Nationwide said average house prices leapt by 1.7% in July, above all forecasts in a Reuters poll of economists and the biggest monthly increase since August 2009, when the market was recovering from the financial crisis.

“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” Nationwide chief economist Robert Gardner said.

The Bank of England reported that mortgage approvals – a first step to house purchases – quadrupled in June after hitting a record low in May, though they remained more than 40% below pre-pandemic levels.

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Prices are now 1.5% higher than they were a year ago, though Nationwide said that on a seasonally adjusted basis, they were 1.6% below a peak reached in April.

The mortgage lender said it expected price gains to continue in the short term, helped by a temporary cut in property purchase tax which finance minister Rishi Sunak announced this month to help what he saw as an ailing market.

But these price increases risked proving a “false dawn” if unemployment surged later this year when temporary job support measures end, Nationwide’s Gardner warned.

Britain’s economy shrank by a quarter over March and April due to the unprecedented hit from the coronavirus lockdown.

Some Bank of England officials fear that while there might be an initial rapid bounceback, this will rapidly slow and it could take years for the economy to regain its former size.

Retail sales are almost back at pre-pandemic levels, for example, but many pubs, restaurants and entertainment venues are closed or operating below capacity due to social distancing restrictions and public concern about the coronavirus.

Reporting by David Milliken

Source: UK Reuters

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UK house prices fall in June but mortgage enquiries surge – Halifax

UK house prices fell for the fourth month in a row in June as the Covid-19 crisis continued to take its toll, but new mortgage enquiries surged, according to a survey released by Halifax on Tuesday.

House prices dipped 0.1% on the month in June as the property market continued to emerge from lockdown, following a 0.2% decline in May. This is the first time since 2010 – when the housing market was still struggling to recover from the global financial crisis – that prices have fallen for four consecutive months.

On the year, house prices rose 2.5% in June, down from a 2.6% increase the month before. On a quarterly basis, prices fell 0.9% compared to a 0.5% drop in May.

Halifax managing director Russell Galley said: “Activity levels bounced back strongly in June, which is typically the busiest month for mortgage activity in the UK. New mortgage enquiries were up by 100% compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months.

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“However, whilst encouraging, it remains too early to say if this level of activity will be sustained.”

Galley said the near-term outlook points to a continuation of the recent modest downward trend in prices through the third quarter, with sentiment indicators, based on surveys of both agents and households, currently at or around multi-year lows.

“Of course, come the autumn, the macroeconomic landscape in the UK should be clearer and the scale of the impact of the pandemic on the labour market more apparent. We do expect greater downward pressure on prices in the medium-term, the extent of which will depend on the success of government support measures and the speed at which the economy can recover.”

Chancellor Rishi Sunak is expected to announce a stamp duty holiday on Wednesday, which would temporarily lift the threshold at which people start paying it from £125,000 to £500,000.

Hansen Lu, property economist at Capital Economics, said: “Looking further ahead, fresh virus outbreaks or the end of the furlough scheme still present risks to the housing market recovery. But there are now some upside risks too – from a possible stamp duty cut, or from post-lockdown buyer behaviour, which hints at a quicker than expected recovery. On balance, we expect UK house prices to fall by around 4% this year.”

By Michele Maatouk

Source: ShareCast

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UK house prices holding up as city folk flock to the country

The number of city-dwellers pursuing their dream of a rural idyll is on the rise. And despite the pandemic, UK house prices are holding up well, says Merryn Somerset Webb.

What do you want right now? Immediate freedom to go to the Italian lakes aside, I bet that near top of your list is a bigger garden. If it isn’t that, it will be a home office or two, or perhaps an intergenerational living annexe – so if lockdown ever comes again you won’t have to go three months without seeing your family.

Whatever is on the list, the odds are you want the house itself to be in the country. In an ideal world your new bigger garden comes with a pool, a tennis court and a teenage bunk house scattered around its many acres.

I don’t want to spend another lockdown in a city (I don’t actually want to spend another day in my city) and around the world, an awful lot of people seem to feel the same. The New York Post reported this week that “frantic” Manhattanites were spilling out of the city into the suburbs, snapping up houses real estate agents had begun to think they would never sell – sometimes sight unseen. Want a five-bedroom colonial style home in Connecticut for $1m? You’d better rush.

You can see the same feeling in the data in the UK. Listings of properties to let in London have surged. Estate agents working within a few hours of London are telling stories of buyers flooding to the countryside, willing to pay almost anything for big houses they wouldn’t mind getting stuck in (Cornwall has gone nuts too). Rightmove reports that searches for houses with gardens were up 42% last month compared with last May.

People who used to care for nothing but kitchen islands and central London postcodes are now obsessing over online photos of raised vegetable beds and croquet lawns. The interest in the market isn’t just anecdotal. Savills saw agreed deals rise 108% on the week last week and exchanges up 53%. Wider market data from TwentyCi shows a 54% increase in the number of properties marked “sold subject to contract” across the market in the past week – and a 99% increase over £1m. If you live in London now and thought that a Surrey Hills house was beyond you before, it almost certainly is now. The rich move fast.

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No real risk of a house price crash

And prices? You’d think that in the wake of a global pandemic you’d already be seeing a bit of a slump. It isn’t necessarily so. Nationwide reported prices down 1.7% in May. That’s a nasty number if you annualise it. But there were so few transactions last month that this number is all but meaningless. Of more interest should be the fact that prices now appear to be more or less flat on where they were a year ago.

So what next? In the short term at least, it seems clear that there is to be a rebalancing of city and non-city prices. What of UK house prices as a whole? Here, things are a little less obvious. House prices are about sentiment, of course. But they are more about the availability and the price of credit and would-be buyers’ incomes.

When prices fall properly it is usually when unemployment rises fast and those who can’t meet their mortgage payments become forced sellers.

Unemployment is likely to rise fast as the furlough scheme comes to an end: ask around and you will hear company after company reluctantly starting redundancy consultations. However, not only could the bounceback be stronger than expected, but a good many households are in considerably better shape than they were pre-lockdown.

Numbers from the Office for National Statistics suggest that the lack of spending opportunities should have allowed the average household to save £182 a week for the past nine weeks, while analysis from Wagestream suggests that 52.5% of those who still have jobs “feel better off than usual.” Demand for payday loans fell 61% in the first three months of this year and in March alone UK consumers paid down a whopping £3.8bn of debt.

Add to this the fact that the banks are keen to not be the baddies in this crisis. They have offered easy access to the mortgage holidays mandated by the government, taken up so far by 1.8 million people, says UK Finance. It’s a reasonably safe bet that they will be firmly encouraged to show exceptional forbearance to those who can’t pay in full when the holiday period is up, too.

At the same time, while rates on very high loan-to-value mortgages have crept up a tiny bit – and some lenders have pulled out of this part of the market – rates overall are low and likely to stay low for now (at some point the levels of stimulus we are seeing will cause inflation, but not quite yet). This week Skipton Building Society reintroduced 85% loan-to-value mortgages and cut rates on lots of products. How does a five-year fix at 1.35% sound to you? Sounds good to me. Skipton is also accepting mortgage applications from furloughed workers, which has to help.

We might also see new government schemes put in place to support prices (there’s a scheme for everything else). This is not the kind of environment in which forced sellers cause a crash.

But prices have become more affordable

The final point to note is that UK house prices aren’t as stupidly expensive as usual at the moment. They have been fairly flat in real terms for a couple of years now and have gradually become more affordable as a result. Those who think that this crisis will spell the end for prime London property (a mistake I often make) might also note that by the end of last year prime central London prices were already down more than 20% from their 2016-2017 peak. That’s not a place collapses usually begin from. They might also note that while 2020 is not 2008, prime central London prices rose an astounding 26% between March 2009 and January 2010.

You will think from all this that I am predicting rising house prices. Buy, buy, buy! I’m absolutely not (that would be out of character, for starters) and nor is anyone else. Savills sees prices down at least 5% this year and Capital Economics sees them down 4%.

There are lots of brakes on this market. The pent-up demand that is running our poor country agents off their feet will slow. The implosion of the buy-to-let sector will bump up supply. There may well be wealth taxes on the way (any liability added to a house cuts its value) and if inflation does kick off, interest rates will have to rise.

My best guess (and my hope) is that house prices will stay flattish in nominal terms and perhaps fall in real terms, a situation that will suit almost everyone. My only worry? That I am on the wrong side of the city-country trade.

By Merryn Somerset Webb

Source: Money Week